SVM Asset Management, the rebranded name for Scottish Value Management, has established an onshore Oeic consisting of three funds.
The company has traditionally focused on institutional funds and offshore products such as hedge funds. It now intends to establish a retail presence through the Oeic, which includes the UK 100 select fund.
This fund aims to outperform the FTSE 100 tracker funds through active management of FTSE 100 stocks. The fund manager, Andrew Kelly, will take a bottom-up approach to stockpicking. He joined SVM in 1996 after four years as a UK equity analyst at Standard Life.
Kelly and his team of nine analysts will pick around 25 stocks for the portfolio, concentrating on sectors such as financial services and retailers.
This fund may appeal to some investors in the current economic environment more than a tracker fund, which passively tracks an index. Standard & Poor's tracker funds survey for 2002 concluded that tracker funds can be riskier than many investors believe. Investors think that they are diversifying stock-specific risk by tracking 100 companies, but Standard & Poor's says the top 15 stocks in the UK make up 63 per cent of the UK stockmarket.
The SVM fund moves the investment risk away from the index and onto the fund manager's stockpicking ability. Rejecting stocks is just as important as selecting stocks and with a small portfolio to play with, the fund manager cannot afford to make too many mistakes.
According to Standard & Poor's, the offshore SVM UK 100 fund is ranked 23 out of 173 funds based on £1,000 invested on a bid-to-bid basis with gross income reinvested over one year to September 23, 2002.